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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

An investment adviser is preparing a comprehensive financial plan for a new client. Which of the following steps should logically come FIRST in the financial planning process?

The first step is establishing the client-adviser relationship and gathering goals and financial data. Only after understanding the client's objectives, finances and risk attitude can the adviser analyse the position, recommend products, implement the plan and monitor it over time.

  1. ARecommending specific mutual fund schemes
  2. BEstablishing the client-adviser relationship and gathering client goals and dataCorrect
  3. CImplementing the recommended portfolio
  4. DMonitoring and reviewing the plan annually

Explanation

The financial planning process begins with establishing the relationship, defining scope and gathering the client's goals, financial data and risk attitude. Product recommendations, implementation and review follow only after the client's position is analysed. Recommending schemes first would be unsuitable because the adviser would lack information.

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